Music Modernization Act: Blanket Licensing and the MLC

The Music Modernization Act is a federal law signed on October 11, 2018, that rewrote how songwriters, artists, producers, and streaming services handle music licensing and royalty payments in the United States. It replaced the old song-by-song mechanical licensing process with a single blanket license for interactive streaming, extended federal copyright protection to sound recordings made before 1972, and gave producers and engineers a statutory way to collect digital performance royalties directly. The law is organized into three titles, and each solved a distinct problem that had accumulated as the industry moved from physical sales to streaming.

What the Act Changed

The statute bundles three separate reforms under one roof.¹

Title I — Musical Works Modernization Act: Creates a blanket license for interactive streaming services and establishes the Mechanical Licensing Collective to administer it.
Title II — Classics Protection and Access Act: Brings pre-1972 sound recordings under federal copyright protection for the first time.
Title III — Allocation for Music Producers Act (AMP Act): Gives producers, mixers, and sound engineers a formal mechanism to collect digital performance royalties through SoundExchange.

The rest of this article walks through each of those pieces and how they work in practice for the people affected.

Blanket Licensing for Streaming Services

Before 2018, a streaming service that wanted to legally offer millions of songs had to obtain a separate compulsory license for every single musical composition in its catalog. That meant filing a notice of intent with each copyright owner, or with the Copyright Office, for every track. When ownership data was incomplete or the rights holder could not be located, the service either risked infringement claims or dropped the song. The volume made real compliance nearly impossible and left large pools of mechanical royalties undelivered.

Title I added Section 115(d) to the Copyright Act, creating a blanket license that any qualifying digital music provider can obtain through the Mechanical Licensing Collective.² One license now covers all musical works available for compulsory licensing. To obtain it, the provider submits a notice of license to the Collective specifying the digital activities it wants to engage in. Unless the Collective rejects the notice within 30 days, the license takes effect on the date the notice was sent.

A provider that holds a valid blanket license and follows its terms is shielded from copyright infringement claims for reproducing and distributing the compositions it streams.² Voluntary licenses negotiated directly between a copyright owner and a service still take priority for whatever songs those private deals cover.

The Mechanical Licensing Collective

The Mechanical Licensing Collective is the nonprofit designated by the U.S. Register of Copyrights to administer the blanket license.³ Streaming services pay their mechanical royalties to the Collective, and the Collective distributes those payments to the songwriters and publishers who own the underlying compositions. The designation was made in July 2019, and the blanket license system went live in January 2021.⁴

The Collective also maintains a public database of musical works and runs the matching operation that connects each streamed recording to the composition it embodies. When the match succeeds, the royalty goes to the right rights holder. When it fails, the money sits in a holding pool. The quality of the data that songwriters and publishers register directly drives whether a match happens.

How Songwriters and Publishers Get Paid

If you write or publish music, registering your works with the Mechanical Licensing Collective is the single most important step you can take to collect streaming royalties under the blanket license. Registration happens through the Collective’s online portal.

The registration record includes the official song title, any alternative titles, and the International Standard Musical Work Code if one has been assigned. You enter your Interested Parties Information number, which is the global identifier for music creators, and your affiliation with a performing rights organization (ASCAP, BMI, SESAC, or GMR). The portal requires a precise breakdown of writer shares that totals exactly 100 percent. Incomplete or incorrect entries in any of these fields can delay payments or push royalties into the unmatched pool.

The portal also includes a matching tool that lets you search recordings reported by streaming services that have not been linked to a registered composition.⁵ If you find one of your songs sitting unmatched, you can propose a match to a work in your catalog. The Collective’s team reviews the proposal before releasing the royalties.⁶ Checking regularly is worthwhile, because that is where money lands when the automated system cannot figure out who to pay.

Once claims are verified, the Collective distributes royalties monthly, roughly 75 days after the end of each usage period.⁷ Statements are available through the portal and can be filtered by streaming service and usage period.⁸

Unmatched Royalties and the Three-Year Clock

Not every royalty dollar finds its owner. When services pay the Collective for tracks that cannot be matched to a registered composition, that money sits in a holding pool. The Act requires the Collective to hold unmatched and unclaimed funds for a minimum of three years before taking further action.⁹ During that window, songwriters and publishers can still search the matching tool, claim their works, and collect what is owed.

After the three-year period expires, any remaining unclaimed royalties are distributed to known copyright owners through a market-share formula.¹⁰ The money goes to rights holders who are already registered, roughly in proportion to their share of overall royalty collections. If you have not claimed your works within three years, the royalties generated by your music can end up in someone else’s payment. The Collective has stated that no market-share distributions have been made yet, but the clock is running on the earliest unmatched funds.

How Streaming Royalty Rates Are Set

The Act changed the standard the Copyright Royalty Board uses to set the rates streaming services pay songwriters and publishers. The old standard, known as the 801(b)(1) approach, directed the Board to balance policy factors including the public interest, a fair return to copyright owners, and a fair income to licensees. The Act replaced it with a willing-buyer/willing-seller standard, which directs the Board to set rates reflecting what the parties would agree to in an open negotiation.¹

Under the most recent rate determination (Phonorecords IV), mechanical royalty rates for the 2023–2027 period step up each year as a percentage of service provider revenue:¹¹

2023: 15.1%
2024: 15.2%
2025: 15.25%
2026: 15.3%
2027: 15.35%

Those percentages are one prong of a multi-part calculation. For a standalone portable subscription like Spotify Premium or Apple Music, the rate is the greater of 15.3 percent of service provider revenue or the lesser of 26.2 percent of total content costs and $1.10 per subscriber per month.¹¹ Free, ad-supported tiers use 26.2 percent of total content costs as their benchmark. The exact formula varies by service type.

Pre-1972 Sound Recordings

Sound recordings made before February 15, 1972, used to fall outside federal copyright law. They were protected, or not, by a patchwork of state laws that varied widely. In several jurisdictions, digital services could stream early rock, jazz, blues, and country recordings without paying royalties because no federal statute required it.

Title II, the Classics Protection and Access Act, brought these recordings under federal protection through 17 U.S.C. § 1401. Anyone who transmits, reproduces, or distributes a pre-1972 recording without the rights owner’s consent during the applicable protection period faces the same legal remedies as a standard copyright infringer.¹² Digital services that stream these tracks now pay royalties into the same statutory licensing system used for modern recordings, administered by SoundExchange.

The Act also set a clear schedule for when these recordings enter the public domain:¹³

Published before 1923: federal protection ended December 31, 2021. These recordings are now in the public domain.
Published 1923–1946: protection extends for a defined period after the initial transition window.
Published 1947–1956: protection extends for a longer period, ending well into the 2030s.
Fixed after 1956 but before February 15, 1972: protection continues until February 15, 2067.

A narrow exception allows non-commercial use of pre-1972 recordings that are no longer being commercially exploited, subject to a good-faith search and a Notice of Noncommercial Use filed with the Copyright Office. The rights owner has 90 days after the notice is indexed to object.¹²

Royalty Rights for Producers, Mixers, and Engineers

Title III, the AMP Act, closed a long-standing gap for the people behind the mixing console. Producers, engineers, and mixers had historically relied on private contracts with artists to collect digital performance royalties. If the artist did not pass the agreed share along, the producer had little recourse.

The Act codified a document called a Letter of Direction in 17 U.S.C. § 114(g)(5). A Letter of Direction is signed by the featured artist and instructs SoundExchange to pay a portion of the artist’s performance royalties directly to a named producer, mixer, or engineer.¹⁴ Once SoundExchange accepts the letter, the producer is treated as the legal owner of that payment stream for the period the letter is in effect. The money flows directly, without the artist in the middle.¹⁵

The letter must include a repertoire chart listing each covered sound recording, along with the payment percentage expressed as a share of the featured artist’s royalties.¹⁵ Getting an artist to sign is usually straightforward when the working relationship is active. Older recordings are harder.

Claiming Royalties When the Artist Is Unreachable

For recordings made before November 1, 1995, § 114(g)(6) provides a backup. A producer can certify under penalty of perjury that they made reasonable efforts to contact the featured artist for at least 120 days and could not obtain a Letter of Direction.¹⁴ If SoundExchange accepts the certification, it deducts 2 percent of the total royalties collected for that recording from the artist’s share and pays it to the producer. For a catalog staple that still gets heavy airplay on satellite radio or webcasting, that 2 percent can accumulate over time.

SoundExchange reports royalty earnings for producers and other creative participants directly to the IRS and issues each payee a 1099 for U.S. taxpayers or a 1042 for international payees.¹⁶ Payments made without a valid W-9 or W-8 on file are subject to backup withholding.

Resolving Ownership Disputes

Overlapping ownership claims are a common reality in music publishing, and the Collective has a formal process for handling them. When two parties register conflicting shares of the same composition, the Collective’s Ownership Dispute Policy applies.¹⁷ The disputed share is held until the parties reach agreement or provide documentation proving their respective claims. Undisputed shares continue to pay normally.

The Collective does not act as an arbiter and will not decide who is right. Its role is to freeze the disputed royalties so neither party collects money that may belong to the other, and to facilitate communication between the claimants. If the parties cannot resolve the dispute on their own, they take it to court or private arbitration. The practical lesson is to get splits documented in writing before a song generates meaningful revenue, not after.

1
U.S. Copyright Office. Music Modernization FAQ
2
Office of the Law Revision Counsel. 17 USC 115 – Scope of Exclusive Rights in Nondramatic Musical Works
3
U.S. Copyright Office. Designation of Mechanical Licensing Collective
4
The Mechanical Licensing Collective. Governance
5
The MLC Help Center. What Is the Matching Tool
6
Mechanical Licensing Collective. Lets Make A Match – The MLCs New Matching Tool
7
The Mechanical Licensing Collective. What Is the Payment Timeline
8
The Mechanical Licensing Collective. Royalty Payments
9
The MLC. Looking One Year Ahead – Market Share Distributions
10
The Mechanical Licensing Collective. Historical Royalties
11
Federal Register. Determination of Royalty Rates and Terms for Making and Distributing Phonorecords – Phonorecords IV
12
Office of the Law Revision Counsel. 17 US Code 1401 – Unauthorized Use of Pre-1972 Sound Recordings
13
Office of the Law Revision Counsel. 17 USC 1401 – Unauthorized Use of Pre-1972 Sound Recordings
14
Office of the Law Revision Counsel. 17 USC 114 – Scope of Exclusive Rights in Sound Recordings
15
SoundExchange. Letters of Direction
16
SoundExchange. Heads Up – A New Tax Requirement for Letters of Direction
17
Mechanical Licensing Collective. Policies